O'Keeffe v Scales

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: Lynch J.
• Judgment Date: 01 January 1998
• Neutral Citation: 1998 WJSC-SC 11456
• Docket Number: [S.C. No. 119 of 1997]
• Date: 01 January 1998

1998 WJSC-SC 11456

THE SUPREME COURT

Barrington J.,

Murphy J.,

Lynch J.

Record No. 119/97

O'KEEFFE v. SEALES

BETWEEN:

Joyce O'Keefe and Patrick O'Keefe

Plaintiffs/Respondents

and

Linda Seales

Defensdant/Appellant

Citations:

MCELROY V FLYNN 1991ILRM 294

FRASER V BUCKLE 1994 1 IR 1, 1996 1 IR 1

MARTELL V CONSETT IRON CO LTD 1955 1 CH 363

HILTON V WOODS 1867 4 EQ 432

GROVEWOOD HOLDINGS PLC V JAMES CAPEL & CO LTD 1994 4 AER 417

PIONEER MACHINERY (RENTALS) LTD V EL-JAY INCORPORATED 93 DLR (3d) 726

SOLICITORS (AMDT) ACT 1994 S68

ALABASTER V HARNESS 1894 2 QB 897

Synopsis

Champerty

Champerty; maintenance; defendant seeking dismissal of action against her on grounds proceedings champertous; impecunious plaintiffs in debt to their solicitor from previous proceedings; whether consequently plaintiffs" solicitor had unlawful interest in the outcome of the proceedings; whether valid grounds for staying action in advance of plenary trial

Held: No grounds for dismissing action in advance of plenary trial (Supreme Court: Barrington J., Murphy J., Lynch J.11/12/1997)

O'Keefe v. Scales [1998] 1 IR 290

1 JUDGMENT of Lynch J. delivered the 11 day of December 1997. [NEM DISS]

2 This is an appeal by the Defendant/Appellant from an order of the High Court (Geoghegan J.) of 21st February 1997 dismissing a motion dated 29th August 1996 brought by the Defendant/Appellant seeking an order dismissing or staying these proceedings against her by reason of the proceedings having been commenced and/or continued in consequence of and/or pursuant to an unlawful agreement or arrangement in the nature of and/or savouring of maintenance and/or champerty.

THE FACTS

3 The Plaintiffs/Respondents are respectively wife and husband of each other. In or about the year 1983 they invested their life's savings together with extensive borrowings in lands and premises known as Knocklofty House situate near Clonmel in the County of Tipperary with a view to using the same as their family home and as a high class hotel and for the development and sale of time share properties. Between the years 1983 and 1989 the said investment failed and the Respondents lost all that they had invested in the project and were financially ruined.

4 During the course of these events, the Respondents engaged the Appellant as their solicitor to advise and assist them in the legal management of their affairs from in or about the month of March 1988 to in or about the month of May 1989. By a plenary summons issued on the 6th April 1995 the Respondents claimed against the Appellant "damages for breach of contract, further or in the alternative breach of duty including breach of statutory duty against the Defendant as solicitor and/or further in the alternative negligence including negligent misstatement."

5 In the course of the unhappy saga of the Respondents" financial ruin between the years 1983 and 1993 the Respondents incurred a liability for £275,620 to Mr. Denis Murnaghan practising as Denis Murnaghan & Co. Solicitors (Mr. Murnaghan). Mr. Murnaghan is the solicitor on record for the Respondents in these proceedings. Of this sum of £275,620 a sum of £164,300 is due on foot of a judgment of the High Court given on the 30th July 1993 in proceedings instituted in 1992 by Mr. Murnaghan against the Respondents and the balance is due on foot of further work done by Mr. Murnaghan as solicitor for the Respondents in proceedings instituted in 1993 by other parties against the Respondents. The sum of £275,620 is included in the Statement of Claim in these proceedings as items of special damage claimed by the Respondents against the Appellant.

6 The Appellant claims in support of her motion to dismiss or stay the Respondent's action that the inclusion of these items amounting to £275,620 in the Statement of Claim involves Mr. Murnaghan in having an interest in the outcome of the action inconsistent with his position as solicitor for the Respondents. The Appellant claims that the inclusion of these items in the Statement of Claim operates to alter Mr. Murnaghan's position as solicitor for the Respondents in this action into a position of maintenance and champerty in that he is assisting in the promotion and conduct of litigation by the Respondents from which he has an interest to receive a share of the award if the Respondents are successful in repayment of the debts due to him as distinct from his proper costs as solicitor for the Respondents in this particular action.

THE SUBMISSIONS

7 I am indebted to Counsel on both sides for their written and oral submission to the court and for the diligent research and care which was obviously put into them, I give a very short summary of the submissions here.

8 Mr. Trainor for the Appellant in the course of a very elaborate written and oral submission referring to all relevant authorities submitted as follows:

9 1. The arrangement between the Respondents and Mr. Murnaghan is one whereby Mr. Murnaghan has agreed to act for the Respondents who are impecunious and who would be unable to meet the costs of the Appellant if she is successful in her defence in circumstances where Mr. Murnaghan will receive out of the proceeds of the action (if any) the monies already due to him to date. In the circumstances Mr. Murnaghan stands first in line to benefit from a successful outcome to these proceedings and is therefore the person with the greatest interest in the success or failure of these proceedings.

10 2. The arrangement pursuant to which Mr. Murnaghan has agreed to act for the Respondents in these proceedings amounts to unlawful maintenance and/or champerty: the illegality deriving from either or both of the following

11 (a) his agreement with the Respondent to receive part of the proceeds of the action and/or

12 (b) his refusal to undertake to the Appellant to discharge her costs in the event that she is successful in her defence.

13 3. The continued prosecution of these proceedings in circumstances where their prosecution is being advanced by an agreement savouring of maintenance and/or champerty is an abuse of process and should be stayed until such time as the matters giving rise to the abuse of process have been brought to an end.

14 4. Despite modern relaxations in the law, agreements of maintenance and/or champerty entered into by solicitors have always been regarded as contrary to public policy.

15 5. The courts have an inherent jurisdiction to stay such proceedings both for the purposes of protecting their own processes and in protection of the other party to the litigation.

16 Mr. Salafia for the Respondents submitted as follows:

17 1. It is a fact that the Respondents claim in these proceedings includes costs in respect of earlier proceedings in which Mr. Murnaghan acted on behalf of the...